PEOPLE could afford a larger or better-equipped car if they calculated vehicle finance based on long-term ownership costs, rather than focusing on a car’s initial price, according to Glass’s Information Services.

Few buyers consider the full cost implications of car ownership, ignoring predicted levels of depreciation, insurance and fuel costs before they buy.

Glass’s suggests that by calculating finance arrangements on the ‘whole life’ cost of their prospective purchase, most buyers would realise they can actually afford a car with a higher initial purchase price.

For example, a three-door Renault Clio 1.4 16V Expression costs £9,050 when new, significantly less than the larger five-door Renault Megane 1.5 DCI Authentique, which is £11,790.

However, their different rates of depreciation means that they will cost their owners the same amount, 37p for every mile driven, after three years and 30,000 miles.

Jeff Paterson, senior car editor at Glass’s, said: "Consumers tend to be seduced by the sticker price, but they ignore depreciation and longer-term running costs at their peril.

“Many are put off by the comparatively high purchase price of prestige badge cars, but whole life cost analysis consistently demonstrates that they are less expensive than people think over the typical period of ownership.

“Diesel cars are also particularly good news at present, as depreciation, insurance and running costs normally remain low."